Dr Gajendra Singh is a Medical Graduate and Public Health Specialist with 15 years of diverse experience in Health System Strengthening in Program Management (Immunization, Maternal & Child Health, Family Planning, Reproductive Health). Other co-authors Pranav Manjunath Nadig, Shafeena Ahammed, Venkatesh Raveena are MSc students at Global Healthcare Management, Coventry University, UK
This article attempts to examine the effect of COVID – 19 on healthcare spending in the UK and India. It is also worth looking that how the two countries managed the crisis as well as how the countries are moving forward for encountering with unexpected shocks and road to Universal Health Care (UHC) through health system resilience and adaptability.
COVID-19 has impacted the health and economic conditions across the globe. It has posed a challenge to countries regarding the investment in clinical services as well as in health systems. It also impacted the aspirations of countries to achieve universal health content (UHC). Healthcare spending can be understood by share of healthcare expenditure in gross domestic product (GDP).
Healthcare Financing in India
Depending on the position of care needed, health institutions in India are mainly classified into three types primary care (at primary health centers), secondary care (at district hospitals), and tertiary care institutions (at technical hospitals like AIIMS). In the duration 2016-17 to 2020-21, per capita spending increased from INR 1308 to INR 1944 and budget allocation for health increased from INR 37061 crore to INR 65001 crore. However, the budget allocation has moved from 5% to just 5.4% of GDP in these 5 years
India’s National Health Accounts 2017-18 shows that out-of-fund payment constitutes 55% of total health expenditure. In National Health Policy 2017 (NHP), India aimed to increase Govt. health expenditure from the being1.15% to 2.5% of GDP by 2025 as well as to decrease the proportion of households facing catastrophic health expenditure from the current levels by 25%, by 2025.
In India Govt. expenditure is 30% of total health expenditure which results in 62% of total health expenditure as an out-of-pocket expense. NHP also recommends that expenditure on health by states should be increased to 8% or more of their budget, however, the state governments in India have just allocated 5.4% of their total budget towards the public health care system.
More than 60% of all healthcares spending in India are out of pocket. Out-of-pocket expenditure is generally financed by household revenues. Tax earnings are the primary source of government backing for health in India, contributing close to 90 of total expenditures. Presently, the public sector contributes around one-third of total expenditure which is quite low as compared to other countries. Informal sector workers who have a high proportion in India have limited access to 
affordable health insurance or health care. The focus of the National Health Mission (NHM) seems to be on hospitalization (including pre and post-hospitalization charges). Still, most of the expenditure made by consumers is on buying drugs. Further, these purchases are substantially made for cases that don’t need hospitalization. This section is hardly covered in social health insurance because of its unorganized nature and high duty-elusion rates. The situation is further exacerbated by the lack of a public sector social health insurance scheme in the country. Among the ensured, content of government health schemes is the major portion. PM-JAY, launched by the Government of India as part of the Ayushman Bharat initiative, could increase the penetration of health insurance in India from 34% to 50%.
The hospital sector in India is expected to reach USD 132 billion by 2023 and captures 80% of the total healthcare market currently. The present government is committed to the investment of around USD 9 billion in coming years for health infrastructure and at least one oxygen generation plant in each of India’s nearly 750 districts. Public expenditure on health in India isn’t increased significantly in the last decade which has caused an estimated 63 million Indians driving into poverty because of out-of-fund expenditure for health care.
Healthcare Financing in United Kingdom (UK)
In a 2017 report by the Commonwealth Fund, the United Kingdom was ranked the best healthcare system in the world overall and was ranked the best in the following categories: Care Process (i.e., effective, safe, coordinated, patient-oriented) and Equity. The UK provides public healthcare to all permanent residents. Healthcare content is free at the point of need and is paid for by general taxation. About 18% of a citizen’s income tax goes towards healthcare, which is about 4.5% of the average citizen’s income. Overall, around 8.4 percent of the UK’s GDP is spent on healthcare. The UK also has a growing private healthcare sector that’s still much lower than the public sector. In 1911 National Insurance Act was introduced, in which a small amount was deducted from an employee’s wage, and in return, they were entitled to free healthcare. The National Health Service (NHS), established in 1946, is responsible for the public healthcare sector of the UK.
In England, health and social care are funded separately. Patients have been required to contribute towards the cost of some NHS services since 1951. Exemption arrangements are in place that covers patients of age under 16 or more than 60. Tax-funded models typically seek to pool risk across large populations and make health services available on a universal basis. Taxes vary based on modality (direct / indirect taxes), source (central/ local government) and purpose (general purpose or earmarked tax). In 1990, to reduce pressure on NHS, tax relief for private medical insurance was introduced which was later abolished in 1997. In 2018, spending on health care in the UK totaled £214.4 billion, equating to £3,227 spent per person. This includes both government and non-government spending on health care. Healthcare expenditure represented 10.0% of GDP in 2018, up from 9.8% in 2017. This increase was a result of healthcare expenditure growing at a faster rate than GDP.
Public spending on health care in the UK totaled £177bn in 2019 which equates to £2,647 per person for the year. In the UK, government health spending per head of population grew by 21.9% in 2020. Public spending on health care was equivalent to 8% of GDP in the UK in 2019. In UK Govt. expenditure is 83% of total health expenditure which results in 9.7% of total health expenditure as an out-of-pocket expense.
The UK Health Accounts break healthcare expenditure down into a range of dimensions, healthcare financing, and healthcare function, healthcare provider, and health spending. Government expenditure on health care, which includes spending by the NHS, local authorities, and other public bodies financing health care, was £166.7 billion in 2018. This equated to just under four-fifths (78%) of total current healthcare expenditure, an increase from 75% in 1997. In 2018, half of the government-financed health care was provided by hospitals, while 64% of long-term care was financed by the government. Around 26% was financed through out-of-pocket funds. Non-government expenditure was financed through four categories, namely out-of-pocket expenditure, voluntary health insurance, charitable financing, and enterprise financing. The available evidence suggests the UK health care system is relatively efficient. For instance, the UK has low spending on pharmaceuticals – owing to the use of cheaper generic drugs – and the average length of stay in hospital is shorter.
Effect of COVID on Healthcare Financing
The COVID-19 pandemic proved the inadequacy of the healthcare system across the world irrespective of population size. However, on the positive side, it accelerated the growth of the home healthcare sector. Pre-pandemic, care at home was limited. In addition to the pandemic, an increase in urbanization and nuclear families were major factors driving this expected growth. COVID-19 will likely catalyze long-term changes in attitudes towards personal health and hygiene, health insurance, fitness and nutrition, and health monitoring and medical check-ups. The pandemic has also accelerated the adoption of digital technologies, including telemedicine. The preventive healthcare market in India was valued at USD 49 billion in 2019 and is expected to reach USD 194 by 2025.
Total current healthcare expenditure in 2020 is estimated at £269 billion, a nominal-terms increase of 20% on spending in 2019. The share of GDP attributed to healthcare rose to around 12.8% in 2020, from 10.2% in 2019. Growth in total healthcare expenditure was driven primarily by a 25% (nominal terms) increase in government healthcare expenditure. Government healthcare spending in 2020 was in the region of £220 billion, accounting for over four-fifths (82%) of total healthcare expenditure.
COVID-19 testing and tracing activities, including NHS Test and Trace services in England and similar services provided in the other UK nations, came into operation in 2020. The NHS Test and Trace budget for the financial year ending (FYE) 2021 was £22 billion. Early estimates suggest spending up to the end of October 2020 was much lower, at around £4 billion, although expenditure in 2021 is expected to be higher. Expenditure on healthcare financed through non-government schemes was approximately £49 billion in 2020, an increase of roughly 2% in nominal terms in 2019. Of the two largest non-government schemes, out-of-pocket expenditure increased by around 4% but expenditure on voluntary health insurance schemes fell by around 23%. The variation in growth rates is partly a result of the different types of healthcare services available through different schemes.
How countries responded to healthcare financing during COVID -19
The complexities and contextual factors associated with the pandemic, particular policy responses, and health system differences make it difficult to draw definitive conclusions about the variation in spending increases in 2020. With the pandemic continuing, the total picture of how health spending will change across different countries remains to be seen.
The government reacted quickly to the COVID-19 crisis, provided massive financial support to protect firms, households, and vulnerable populations, and strengthened health systems, digitalization, and the transition to a carbon-neutral economy. Digital intervention played a critical role during the Covid-19 pandemic response management and it also created a poll of non-integrated multiple platforms and duplication of digital intervention across center and state. Initially, looking to uncertainty around, a lockdown was imposed majorly in all parts of the country across the globe. Later, understanding the situation and gravity of the economic slowdown, the government gradually reopened the economy in steps. The full emergency lockdown is being lifted in phases, starting with the reopening of schools and recreation in outdoor public spaces. Next, non-essential retail, shops, hairdressers, gyms, and outdoor hospitality were reopened followed by the lifting of most social contact rules and the opening of indoor hospitality and hotels.
Moving ahead from conventional health systems, the Government of India has shown remarkable response in form of digitally driven solutions like Aarogya Setu and CoWIN to deal with unforeseen COVID crises. In the UK, the government increased taxes for ensuring better healthcare services. It was welcomed by one section while others considered NHS as a black hole that is just engulfing the taxpayer’s money. The Covid-19 response has required more than £30 billion of additional health spending and £4.7 billion of extra local government funding.
Strategies for future
The NHS and local government may be dealing with these consequences and costs for many years to come. The process of working out what the demand for health and care services will be and how far existing budgets will stretch next year, or indeed next month, is all but a guessing game. Beyond the health and care system, the macro-economic outlook is equally uncertain. This, of course, will have implications for public spending; overall the Chancellor is likely to have less to spend now than anyone would have anticipated at the start of the year. Growth in government healthcare expenditure is likely to have been driven both by direct costs of the pandemic, such as spending on new testing and tracing services, and indirect costs to existing services, such as additional personal protective equipment for frontline healthcare workers. Growth in non-government healthcare expenditure varied by financing scheme; the coronavirus pandemic reduced household spending on medical services but spending on medical goods increased.
Globally, the Covid-19 crisis has underlined that whatever is being done for healthcare, it’s not enough. This statement summarizes the future need for more budgetary allocation for healthcare across the world. The COVID-19 pandemic requires governments to act on all fronts simultaneously to manage, exit, and recover from the crisis. This requires governments to reconsider their multi-level governance systems and regional development priorities. Many countries moved from a national approach to a more territorial approach when the crisis hit in the spring of 2020. This allows them to adapt the crisis responses to local needs and limit the costs of national lockdowns.
Governments and healthcare industries can sense that consumer behavior is now more inclined toward non-traditional healthcare settings which include products, services, and modalities. Hence, Governments and industries are trying to equip their response with tech-enabled solutions which can integrate and customize as per patient needs. The market size for telemedicine in India (USD 830 million, as of 2019) is projected to increase to USD 5.5 billion by 2025, growing at a CAGR of 31% during 2020-2025.
Interestingly, in continuation of the need for curative services, more demand is for preventive, diagnostic, and rehabilitation services. It’s time to work on prevention, addressing stalling life expectancies and redressing health inequalities, and reforming social care. The UK government had to increase spending as a matter of genuine urgency – a positive action reflecting the government’s ability to rapidly redirect resources to respond to the crisis, and a core component of health system resiliency.
NHS in the UK is planning to scale up of video platform available to all providers to redesign the outpatient services and avoid the need for the third face-to-face hospital outpatient visit. Starting in early 2020, it has already delivered three million video consultations and 21.5 million virtual appointments including both telephone and video consultations, accounting for around 30% of outpatient attendances. The use of virtual consultation also saved 550 million patient travel miles and avoided around 112,000 tonnes of CO2 emissions, while importantly reducing risk to both patients and staff.
As a long-term plan, NHS funding is supposed to be increased by £33.9 billion from 2023 to 2024. It will be used for the updation of healthcare infrastructure and clearing maintenance backlogs. The Govt. has also ensured non-ring-fenced financial support of £4.6 billion to local governments and an additional £1.55 billion to councils so that they can manage the immediate and long-term impacts of COVID-19. The increase in UK spending may, however, also reflect the UK’s structural vulnerabilities going into the pandemic. Consistently low levels of investment in health care capital as a proportion of GDP meant less flexibility in the earlier waves of the pandemic to cope with rising Covid cases.
Suggestions
1. Understanding the need of modifying and strengthening the existing healthcare system, Govt. has started preparing in the following ways
- Increasing budgetary allocation and spending on healthcare
- Addressing the health inequalities along with the focus on quality
- Including citizens in health coverage
- Making healthcare infrastructure ready for future
- Preparing future healthcare workforce
- Strengthening the public health crisis response system
- Improving private sector participation and support, Regulation of private healthcare
- Embedding Digital health to bridge system gaps
- Investing in medical research
2. Strengthening primary healthcare is the key to fighting against any such unforeseen crisis in the future. This deeply embedded primary healthcare should be well complemented by a robust supply chain and a well-spread network of community healthcare workers. Focus on prevention and early management of health problems can reduce the need for complicated specialist care provided at the tertiary level.
3. Traditionally healthcare is financed by one or more methods like taxation, private health insurance, and social health insurance. Uniformly implemented Social Health Insurance is required to supplement tax revenues as a modality of healthcare financing. Successfully channeling current levels of out-of-pocket spending into pre-payment pools would help reduce large and catastrophic, one-time payments.
India needs to strengthen the existing social health insurance schemes like Ayushman Bharat, Employees’ State Insurance Scheme (ESIS), Rashtriya Swasthya Bima Yojana (RSBY), and other state-specific schemes so that all layers of society can be covered, and health inequality can be reduced. Identifying, engaging, and enrolling in the informal sector will be a challenge. It can be done through existing platforms like Jan Dhan, Aadhar, and extensive use of mobiles. Similarly, NHS in the UK needs to invest more to ensure coverage as well as equity issues.
4. Looking at the emerging variants and ever-changing scenario, countries may have to introduce multiple doses of vaccines as well as cover all age groups. Initially, many countries introduced free vaccinations for all their citizens. However, it may not be possible for Governments to arrange finance on a long-term basis. Forex. India may have to arrange for approx. USD 10 billion if aims to give one extra dose of vaccine to the entire population while the UK may require around USD 1 billion for the same. Except for vulnerable and marginalized populations, the countries must explore alternate channels and strategies for bridging this gap for the rest of the population. Also, additional funds for COVID-19 testing, tracing, isolation, and quarantine should not be missed while planning.
5. To augment healthcare financing, blended finance instruments like Social Success Note can be explored which work on the principle of pay-for-success. It is centered on increasing the quantum of financing for SDG projects. Donors are the main source of the catalytic funding that creates the market-equivalent investments that mobilize private investment. It may help for-profit social enterprises to access affordable debt for scaling their operations and impact while delivering mission-aligned targets and outcomes. It can be used as a strategic partnership with the private sector to mobilize funds for healthcare initiatives. It needs some legal, regulatory, and administrative reforms in the domain of Corporate Social Responsibility (CSR) along with transparency. NGOs and CSOs should also open for commercial investments as they have a deep impact and reach vulnerable populations.
6. India faces dual challenges of shortage of healthcare workforce and need for upskilling of the existing healthcare workforce. It needs to set up healthcare skilling centers across districts to train community healthcare volunteers. Community centers can be connected to virtual institutes for skilling courses in a hybrid format. Such centers would help mitigate community health crises.
7. The Covid-19 pandemic led to multiple sources of information, a lack of correct and timely information and challenges in navigating to avail required healthcare needs. A single national health mobile app, National Swasth Citizen App, is advisable to meet all healthcare needs of a citizen. India should move towards a One Nation One Health App for citizens to request ambulances, nearest hospitals, and doctors, bed availability status, appointment booking, laboratories, blood bank, oxygen, pharmacies, telemedicine/ online consultation, vaccination, and reporting.
8. During the first quarter of 2021, significant challenges hindered vaccine deployment, including limited vaccine supplies, inequitable distribution of existing supply between countries, and emerging viral variants of concern. Regional disparities in accessing vaccines are generally limited, but in countries with significant disparities, factors relating to health or demographic factors may be at play. The crisis has revealed weaknesses in many regions, including access to healthcare and housing, demographic changes, and digital gaps.
